Which of the Following Is True of the Call Provision

question 55

Multiple Choice

Which of the following is true of the call provision found in preferred stocks?

• A)The call provision gives preferred stockholders the right to both elect the members of the board of directors and call for votes on corporate issues.
• B)The call provision gives preferred stockholders priority over common stockholders with regard to ownership of the assets of the firm.
• C)The call provision gives preferred stockholders the right to receive preferred dividends that were not paid in previous years before any common stock dividends can be paid.
• D)The call provision gives the issuing firm right to redeem its preferred stock by incorporating a maturity option in the issue.
• E)The call provision gives preferred stock the right to participate with the common stock in a firm's earnings.

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Definitions:

Resource

Raw materials, labor, capital, and other inputs used in the production of goods and services.

External Benefits

Benefits of a good or service that are not captured by the market price and are received by third parties.

Competitive Market

A market structure characterized by many buyers and sellers, free entry and exit, and products that are similar but differentiated.

Maximize Profit

The goal of adjusting production or service levels to achieve the highest possible returns.